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Belgium chocolate, anyone?

07 March 2006 Angelo Coppola

Dirk Tiemann, head of sales at Fidelity International South Africa, spoke about stock picking, said that although there are numerous opportunities offshore its important to select the right country.

Predicting currency levels is almost impossible, he says and the cost of Belgium chocolate theory seems to be the issue as people are prepared to pay for perceived value, regardless of what its actually worth as the price was increased so the sales increased.

As soon as the price is lowered the peoples perception of worth drops and sales of the product dropped.

Equities in the last three years have been pretty good, this after the longest bear market in generations, with predictions that equities wouldnt show returns for several years. We all know what happened.

In terms of markets, Egypt, Columbia and Turkey have been the star performers in the emerging markets, returning 118%, 159%, and 197%.

According to their research they believe that the global economy has entered an overheat phase, with rate hikes the order of the day. Business confidence is good, and there are major drivers still intact, although the concern about inflation is increasing, and this could become the new growth driver.

There is a lot of cash floating around from the institutional investors and they have liabilities that are not being met by the returns on bonds. They are looking for alternatives.

He also maintains that global property securities might be an option, as they behave differently to equities, which may be moving any either direction.

In terms of investing he advocates a long term view, as there is a lot of activity internationally and companies and countries are operating in this space. Countries also go through cycles, and currently China and India are countries that are at the start of their growth curves.

They will need the most basic of goods, and oil bulls are predicting that China could well be consuming 60m litres of oil per day in seven years time, much the same as Korea is doing currently. Alternatively he suggests that they (China) could be looking at other sources of energy perhaps even nuclear energy?

Editor's thoughts:

Now, in terms of energy,something we should seriously be considering, given the perilous state of our energy situation in certain parts of the country - is nuclear energy.

In terms of the Belgium chocolate experiement, I wonder what the situtaion would be in terms of charging fees? Probably the same results - for brokers I would think, provided that the returns are there...

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